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EDB Chairman Prabhash Subasinghe
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Export Development Board (EDB) Chairman Prabhash Subasinghe is renewing his call for greater product and market diversification to enhance Sri Lanka’s foreign exchange earnings amidst COVID-19 challenges.
Subasinghe made this appeal as the EDB released latest data which confirmed exports touched a near billion dollars for the third consecutive month in August.
Exports in August were $947.7 million, down by 19% from a year earlier.
EDB said despite the decline in exports, some products, like Coconut-Based Products, Electronics and Electronic Components, Spices and Essential Oils, and Food and Beverages, recorded a positive growth of 22.88%, 8.32%, 19.4%, and 11.45%, respectively, in August as against a year earlier.
Export earnings for January to August were $6.4 billion down by 19% from $7.9 billion in the corresponding period of last year. EDB however said it was an improved performance, compared with the decline of 21.08% recorded in January to July.
“It is remarkable to see another month of almost a billion dollars of exports. However, we are being watchful of the months ahead whilst understanding the impact of COVID-19 on our key markets of US and Europe,” EDB Chief Subasinghe said.
“We also need to focus on export product and market diversification which is seriously lacking today. Whilst appreciating that the US and the EU are the largest markets, we need to now create a significant export market in Asia including China. The China FTA will certainly help in this regard. Export product diversification must simultaneously happen so that we can create more billion-dollar industries for Sri Lanka,” he added.
Export performance of major sectors in August
Export earnings from Apparel and Textiles declined by 11.99 % to $438.34 million during the month of August, compared with $498.03 million recorded in August 2019. In Apparel, 6.15% decline recorded in August in comparison to July.
Despite the decline in the sector, earnings from exports of made-up Textiles increased by two-hundred-fold in August in comparison to August 2019.
In addition, export earnings from Rubber and Rubber-Finished Products have decreased by 2.71 % Year-on-Year (Y-o-Y) to $72.53 million in August, due to bearish performance in exports of Pneumatic and Retreated Rubber Tyres and Tubes, Gaskets, Washers, Seals etc., of Hard Rubber. However, exports of Industrial and Surgical Gloves of Rubber have increased by 36.19 % Y-o-Y to $23.07 million in August.
Export earnings from tea in August, which made up 12% of merchandise exports declined by 13.27% Y-o-Y to $102.97 million and the export volume also declined by 16.01% in August, compared to August 2019. The decline was mainly due to lower demand for tea from Iran and Iraq.
Earnings from all the major categories of Coconut-Based Products increased in August, compared with August 2019. Earnings from Liquid Coconut Milk and Coconut Oil categorised under Coconut Kernel Products increased by 89.15% and 114.38%, respectively. Being the largest contributor to Coconut-Based sector, Coco Peat, Fibre Pith, and Moulded Products, which categorised under the Coconut Fibre Products increased by 20.71% to $13.52 million in August in comparison to August 2019. Earnings from Activated Carbon, which is categorised under Coconut-Shell Products, increased by 7.18% in August, compared to August 2019.
Export earnings from Spices and Essential Oils have increased significantly by 19.4% to $39.88 million in August, compared with the value of $33.4 million recorded in August 2019, with a significant increase in the export of cinnamon (53.55%).
Earnings from export of Electrical and Electronic Components (EEC) increased by 8.25% to $32.93 million in August. Also, earnings from export of EEC increased by 2.39% to $32.93 million in August, compared with July. Export of Switches, Boards and Panels increased by 14.10% Y-o-Y to $4.29 million in August and export of other EEC products increased by 19.77 % Y-o-Y to $17.63 million.
Export Performance during January-August
Total export earnings for January-August was $6,400.21 million, compared to $7,921.16 million recorded in a similar period of the previous year – a decline of 19.2 %. This shows an improved performance, compared with the decline of 21.08% recorded in January to July.
Major exports, such as Apparel and Textiles ($2,842.04 million), Tea ($805.57 million), Coconut and Coconut-Based Products ($421.70 million), and Rubber and Rubber-based products ($506.75 million) recorded decreases of 23.69%, 11.96%, 0.43%, and 16.91%, respectively, during January-August, compared to the similar period of previous year. Petroleum Products, Food and Beverages, Chemical and Plastic Products, and Other Export Crops recorded positive growth rates during the period.
The export sectors that shows a positive growth at disaggregate level includes export of Industrial and Surgical Gloves of Rubber, Coconut Oil, Coconut Cream, Liquid Coconut Milk, Coconut Flour, Coconut Vinegar, Coconut Shell Charcoal, Mattress Fibre, Areca Nuts, Ginger, Essential Oils, Made-up Textile Articles, Processed Food, and Mitts and Mittens (Plastic Products).
Earnings from the export of Personal Protective Equipment (PPE) related products increased by 38.32% to $541.94 m in January to August, compared with the value of $391.79 million recorded in the corresponding period of previous year. The strong performance was mainly due to the increased exports of Other Made-Up Articles (HS 630790) and Articles of Apparel and Clothing Accessories of Plastics (HS 392620).
Sri Lanka’s trade performance in major markets
The top five export destinations during the period January-August were United States of America ($1,652.17 million), United Kingdom ($552.46 million), India ($396.96 million), Germany ($371.05 million), and Italy ($280.51 million) absorbed over 50% of exports recorded in the period.
Being the largest single export destination, the USA absorbed $248.63 million worth of exports in August, recording a decline of 11.2 % in comparison to $280 million absorbed in August 2019. Also, exports to United States of America decreased by 20.69 % in January-August in comparison to January-August 2019.
Exports to United Kingdom as the largest trading partner in the EU Region recorded an increase of 8.69% to $90.76 million in August, compared with August 2019.
Further, exports to Italy, Canada, China, Japan and Turkey have also shown better performance during the month of August. Exports to China grew significantly by 34.47% in August led by earnings from export of Apparel, Tea in Bulk, and Activated Carbon.
Export of Services
The services exports estimated by EDB, which includes ICT/BPM, Construction, Financial Services and Transport and Logistics, show exports of $2,224.02 million for the period of January-August down by 14% from, compared to $2,584.67 million recorded in the corresponding period of the previous year.
